January 2016

Launched by the firm’s Consumer Law Group, the blog updates readers on key developments within consumer law and provides insights that are relevant to companies and individuals that may be affected by the ever-increasing patchwork of federal and state consumer protection statutes.

On January 7, 2016, the Northern District of Illinois ruled on a motion to dismiss a 10-count complaint applying the law of all 50 states and the District of Columbia in a suit against manufacturer Rust-Oleum. The 40 putative class plaintiffs hail from 27 states in this multi-district, consolidated litigation. The suit alleges that a Rust-Oleum product – Deck & Concrete Restore – contains latent defects that result in bubbling, chipping or other premature failure. Rust-Oleum moved to dismiss, asserting what appears to be every conceivable pleading defect, jurisdictional issue and structural claim problem. The 91-page opinion painstakingly trudged through the arguments. On balance the majority of the rulings favor the plaintiffs, finding arguments premature or fact-driven. Among the debris, however, Rust-Oleum prevailed on a few fronts. First, plaintiffs alleged that Restore’s limited warranty was unenforceable because the limitations were not conspicuous. Rust-Oleum argued that damage limitations need not appear conspicuously on a limited (as opposed to a full) warranty. The court agreed, finding that the warranty was clearly labeled “limited,” precluding application of the Magnuson-Moss Warranty Act.

In his 2016 State of the State address, Governor Andrew M. Cuomo bemoaned the absence of federal definitions of terms commonly used on food labels, such as “all natural.” He indicated his plan to have New York State health officials develop such definitions and provide a stamp of approval indicating adherence to the State’s definitions that would be placed on food packaging labels. Presumably, this initiative will undergo a public comment process before any definitions are finalized or the parameters of the approval process are set. But questions regarding whether such state efforts to define these terms would be found to be pre-empted by federal regulation if challenged will inevitably arise, particularly given the FDA’s November 2015 notice seeking public comments on the use of “natural” on food labels. The Governor’s speech is available here and his remarks about food labeling can be found at 1:04:40. Click here for a transcript of Gov. Cuomo’s speech.

On January 5, 2016, three putative class plaintiffs – Kate McLellan, Teresa Black and David Urban – filed a nationwide class action lawsuit against Fitbit Inc. in the Northern District of California. Fitbits are wrist-based devices that track fitness activity. At the center of the suit is the PurePulse Tracker, which records the wearer’s heart rate during fitness activities. The suit brings a panoply of consumer fraud claims – common law fraud, fraud in the inducement, breach of express and implied warranties, and violations of the California Unfair Competition Law and Consumer Legal Remedies Act, along with parallel claims under Colorado and Wisconsin business codes – but rests upon a central allegation. To wit: plaintiffs claim Fitbit’s advertising representations regarding the consistency and accuracy of its PurePulse Trackers in recording heart rates during intense physical activity are false. The Complaint also challenges Fitbit’s use of a post-purchase agreement, required to activate the PurePulse Tracker, as unconscionable.

The U.S. Supreme Court has granted certiorari to address whether a federal court of appeals has jurisdiction under both Article III and 28 U.S.C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice. Microsoft Corp. v. Baker, No. 15-457 (cert. granted Jan. 15, 2016). In the proceedings below, the Ninth Circuit held that a stipulated dismissal of an individual claim is an adverse and appealable final judgment and that the plaintiffs did not lose their ability to appeal from a stipulated dismissal with prejudice of their lawsuit and from the order striking their class allegations. A link to the Ninth Circuit’s opinion is available here.